Liu v. Moore

• Decision Date: 29 January 1999
• Docket Number: No. B116425,B116425
• Court: California Court of Appeals Court of Appeals
• Parties: , 99 Cal. Daily Op. Serv. 1050, 99 Cal. Daily Op. Serv. 871, 98 Daily Journal D.A.R. 1059 Deborah MOORE, Plaintiff and Appellant, v. Hong LIU, Defendant and Respondent.

Page 807

81 Cal.Rptr.2d 807

69 Cal.App.4th 745, 99 Cal. Daily Op. Serv. 1050,

99 Cal. Daily Op. Serv. 871,

98 Daily Journal D.A.R. 1059

Deborah MOORE, Plaintiff and Appellant, v. Hong LIU, Defendant and Respondent.

No. B116425.

Court of Appeal, Second District, Division 3, California.

Jan. 29, 1999.

As Modified Feb. 5, 1999.

Rehearing Denied Feb. 22, 1999.

[69 Cal.App.4th 747] Mark Allen Kleiman, Santa Monica, for Plaintiff and Appellant.

No appearance for Defendant and Respondent.

CROSKEY, Acting P.J.

This appeal addresses the question whether the plaintiff in a SLAPP suit (a Strategic Lawsuit Against Public Participation) can, by the device of dismissing the SLAPP prior to a hearing on the defendant's motion to strike the complaint, avoid paying the attorney's fees incurred by the defendant in defending the suit. ¹ In the instant case, the appellant contends the respondents filed a SLAPP cross-complaint against her. The trial court ruled that because respondents had dismissed their cross-complaint prior to the hearing on appellant's section 425.16 motion to strike that pleading, there was no need to decide the merits of that motion to strike. The trial court concluded that because appellant could not be said to be the prevailing party on her motion to strike, she was not entitled to section 425.16 attorney's fees and costs. The basis of the court's conclusion is the provision in the anti-SLAPP statute which provides that attorney's fees and costs are awarded to a defendant who prevails on a motion to strike. (§ 425.16, subd. (c).)

We hold the trial court's ruling constitutes a nullification of an important part of California's anti-SLAPP legislation. If indeed respondents' cross-complaint against appellant is a SLAPP suit, then the court's decision to not hear the merits of appellant's motion to strike deprives appellant of the monetary relief which the Legislature intended to give her, while at the same time it relieves respondents of the punishment which section 425.16 imposes on persons who use the courts to chill others' exercise of their constitutional rights. We therefore reverse the

trial court's order denying appellant attorney's fees and costs, and remand the case for further proceedings on the issue of the merits of appellant's motion to strike and, depending on the ruling thereon, her request for fees and costs.

FACTUAL AND PROCEDURAL BACKGROUND

This case had its beginning when Stefan Ashkenazy ("Ashkenazy") sued Hong Liu ("Liu") and Master Hong Alternative Healing ("Alternative Healing;" collectively, "defendants"). Alternative Healing is apparently a health care facility run by Liu. In his complaint, Ashkenazy alleged personal injuries connected with defendants' provision of health care services to him.

In February 1997, defendants filed a third party cross-complaint against appellant Deborah Moore ("Moore") and others. In that pleading the defendants alleged causes of action against Moore for breach of fiduciary duty, intentional and negligent interference with prospective economic advantage, indemnity, apportionment of fault, and declaratory relief.

After being served with defendants' cross-complaint, Moore moved to strike it, contending it was a SLAPP suit. According to a declaration filed by Moore in support of her motion to strike, she had been employed, as a processor of medical bills, by the medical doctor with whom defendants shared office space, one Kwang Young ("Young"). During the course of her employment by Young she reported, to governmental agencies, irregularities in his Medicare and insurance company billing. She also notified these agencies that Liu was holding himself out as a medical doctor when he was not licensed as such, and that Young was engaging in the falsification and destruction of patients' medical records.

Defendants did not submit opposition to Moore's motion to strike. Rather, in July 1997, prior to the hearing on that motion, defendants filed a request to have their cross-complaint dismissed as to Moore only. The dismissal was without prejudice. No hearing was ever held on Moore's motion to strike.

Thereafter, Moore filed a motion, under subdivision (c) of section 425.16, seeking attorney's fees and costs from defendants. In September 1997, the trial court denied the motion, saying Moore does not fit within the specific language of subdivision (c). Subdivision (c) states that fees and costs are to be awarded to "a prevailing defendant on a special motion to strike." The court reasoned there was no longer a viable motion to strike, because of the dismissal of Moore from the cross-complaint, and therefore Moore could not be a prevailing party on such a motion. The court ruled that if Moore wanted attorney's fees, she should have made a motion for them under section 128.7. ²

ISSUES ON APPEAL

Moore's appeal raises the question whether a SLAPP plaintiff can avoid payment of the SLAPP defendant's section 425.16 fees and costs by dismissing that defendant from the case prior to a hearing on the defendant's motion to strike the SLAPP complaint. Moore also raises two other issues. First, was she entitled to attorney's fees under sections 1032 and 1033.5 when the cross-complaint against her was dismissed and, second, is she entitled to attorney's fees for prevailing in this appeal?

DISCUSSION

l. Moore Has a Right to Have Her Section 425.16 Motion Heard

The purpose of section 425.16 is clearly to give relief, including financial relief in the form of attorney's fees and costs, to persons who have been victimized by meritless, retaliatory SLAPP lawsuits because of their "participation in matters of public significance" (§ 425.16, subd. (a)). Under the trial court's reasoning, a defendant in a SLAPP suit who has been dismissed from that suit after filing a section 425.16 motion to strike, must jump through an additional hoop to obtain attorney's fees and costs--a motion under section 128.7--even though section 425.16 already provides for an award of those expenses. Such a requirement, even if it were workable (which, as discussed below, it is not), would prolong both the defendant's predicament and the plaintiff's outrageous behavior.

Section 128.7 is not a viable alternative to the attorney's fees and costs relief afforded by section 425.16. First, under subdivision (c)(1) of section 128.7 (see fn. 2, ante.), a SLAPP defendant cannot even file a section 128.7 motion with the court if the plaintiff has, within 30 days of being served with such motion, dismissed the defendant from the suit, since the dismissal has the effect of withdrawing the challenged complaint. Second, whereas section 425.16 requires the court to award fees and costs to a defendant who prevails on a motion to strike brought under that section, section 128.7 gives the court discretion as to what, if any, sanction it will impose on a litigant. (§ 128.7, subds. (c)(1), & (d).) Thus under section 128.7, it is possible for the plaintiff in a SLAPP suit to file its meritless complaint with impunity by simply dismissing the SLAPP defendant within 30 days of being served with a section 128.7 motion. A reading of section 425.16 clearly shows that the Legislature envisioned actual relief for SLAPP defendants when it drafted that statute.

We conclude the trial court's decision works a nullification of an important provision of section 425.16. We hold that a defendant who is voluntarily dismissed, with or without prejudice, after filing a section 425.16 motion to strike, is nevertheless entitled to have the merits of such motion heard as a predicate to a determination of the defendant's motion for attorney's fees and costs under subdivision (c) of that section. Therefore, the order denying Moore's motion for fees and costs must be reversed and the case remanded for further proceedings on Moore's motion to strike. ³

2. Coltrain v. Shewalter Does Not Require a Different Result

Coltrain v. Shewalter (1998) 66 Cal.App.4th 94, 77 Cal.Rptr.2d 600 ("Coltrain ") also grappled with the issue of a defendant's section 425.16 claim to fees and costs when the plaintiff has dismissed its suit prior to the hearing on the defendant's section 425.16 motion to strike the complaint. Coltrain held that in such a situation, "the trial court has discretion to determine whether the defendant is the prevailing party for purposes of attorney's fees under Code of Civil Procedure section 425.16, subdivision (c)." (Id. at p. 107, 77 Cal.Rptr.2d 600.) "In making that determination," said the Coltrain court, "the critical issue is which party realized its objectives in the litigation. Since the defendant's goal is to make the plaintiff go away with its tail between its legs, ordinarily the prevailing party will be the defendant. The plaintiff, however, may try to show it actually dismissed because it had substantially achieved its goals through a settlement or other means, because the defendant was insolvent, or for other reasons unrelated to the probability of success on the merits." (Ibid.) The court stated that "regardless of whether the action is a SLAPP suit or not, the plaintiff may have good-faith reasons for the dismissal that have nothing to do with oppressing the defendant or avoiding liability for attorney's fees." (Ibid.)

We respectfully disagree with Coltrain's reasoning on this point. To begin with, if the plaintiff in a SLAPP suit "substantially achieved its goals through a settlement or other means," then the plaintiff succeeded in "chill [ing] the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances" (§ 425.16, subd. (a)), since that is the purpose of a SLAPP suit. Also, in a SLAPP, it is quite possible that the plaintiff is not worried the defendant might be insolvent, since the focus of the SLAPP is to chill speech and/or the petitioning of government, not necessarily to line the plaintiff's pockets with the defendant's money.

Moreover, section...